The 3 Ways a General Liability Policy Protects Your Nonprofit

Photo Credit: Helga Weber via Compfight cc

Photo Credit: Helga Weber via Compfight cc

 

General liability is a cornerstone coverage for all businesses, including nonprofits.

In this post, we’ll discuss the three coverages that make up a general liability policy.

Nonprofit organizations should have this policy in place as a key component to protecting and defending board members, employees, and volunteers. This protection is not for board members, employees, or volunteers if they get hurt, but if they are included in a lawsuit that might be addressed by the general liability policy. (For more information on who is an insured under your general liability policy click here.)

Let’s unpack the three ways a general liability policy can protect your nonprofit.

The general liability policy includes three coverages:

  1. Coverage A: Bodily Injury and Property Damage
  2. Coverage B: Personal and Advertising Injury
  3. Coverage C: Medical Payments

What follows is a brief introduction to these coverages based on an unendorsed general liability policy (‘unendorsed’ means that the policy is unchanged by additional insurance policy forms).

Coverage A: Nonprofit organizations and bodily injury and property damage

Coverage A of the unendorsed general liability policy defends or pays claims for the insured organization it or any other insured doing work for the organization is accused of causing bodily injury or property damage due to negligence of some type.

An example:  Your nonprofit offers volunteer services to elderly homeowners. During your work, your volunteer cut down a tree that falls into a neighbor’s house, injuring a resident. Your nonprofit might have coverage under Coverage A for causing bodily injury and property damage to a third party.

Another example: Your nonprofit hosts after school programs for area teens at the local church. You are responsible for 35 teenagers, yet you only have one employee managing all of that adolescent energy. While you’re checking your Facebook feed, eight teens sneak out of the room and play soccer in the sanctuary, resulting in the destruction of a $5,000 piece of art and a $2,000 drum set in the orchestra area. Your nonprofit might have coverage under Coverage A for the property damage.

Basically, if someone makes a claim that you are responsible for bodily injury or property damage, and the incident isn’t excluded** on the policy, then Coverage A is where you would hope to find your defense or bucket of cash to pay a claim.

**The standard policy has 17 exclusions built in, so it’s always good to look directly at the exclusions to see if any of them make you nervous.

Coverage B: Nonprofit organizations and personal and advertising injury

This section of the general liability policy addresses the following types of claims or situations (from the CG 00 01 04 13 – Insurance Services Offices):

  • False arrest, detention, or imprisonment
  • Malicious prosecution
  • Wrongful eviction, entry, or invasion of right of private occupancy
  • Libel, slander, or other disparages
  • Invasion of privacy by oral or written publication
  • The use of another’s advertising idea in your advertisement
  • Infringement of copyright, title, or slogan in your advertisement

Again, there are 16 exclusions to this Coverage B, so make sure to review your policy, especially if you have a heavy media exposure including print or web content, forums and chatrooms (which are excluded), etc.

If you do have a heavy media exposure, it’s important to consider a specific media liability policy.

Note that if you are a residential facility, this coverage can be important. False ‘detention or imprisonment’ and ‘wrongful eviction’ could be an issue.

Occasionally this coverage will be completely excluded from your policy.  You always want to make sure that any insurance proposal you receive has a limit in it for ‘Personal and Advertising Injury’.

Coverage C: Medical payments

Coverage C is kind of like insurance for your insurance. If someone gets hurt on your premises or because of your operations, then the policy affords a small amount to help make medical payments on behalf of the individual (excluding employees and, sometimes, volunteers as volunteers will occasionally be excluded by your carrier).

You do not need to be negligent or at fault for this coverage to kick in. It is, in essence, a good will coverage, providing your nonprofit organization some funds to pay for first aid, necessary medical, ambulance, or even funeral expenses as deemed reasonable.

The hope is that making medical payments will help cut off a general liability (Coverage A) claim for big dollar damages.

The limit for these payments will be, at the low end, $1,000, to roughly $20,000 (the highest limit I’m aware of among the nonprofit insurance carriers I represent).

Coverages A, B, and C make General Liability a Cornerstone Policy

If you are serious about protecting your stakeholders, then general liability is an absolute must. Your organization might need professional liability, abuse and molestation liability, directors and officers liability, media liability, cyber liability, and any other number of coverages, but general liability is the cornerstone of your protection.

Make sure to discuss your specific needs with your insurance agent or insurance provider. All situations are unique and each nonprofit is different, so take your specific circumstances to a licensed professional who can help you make the best decisions for your organization.

If you are stumped and don’t have an agent who seems to grasp your needs as a nonprofit, please reach out through my contact form here.

If you consider this content helpful, please send to your friends in the nonprofit biz.

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